EDITED VERSION OF NOTICE OF PRIVATE RULING
Authorisation Number: 34331
This Ruling is a 'Private Ruling' for the purposes of Part IVAA of the Taxation Administration Act 1953.
YEAR(S) OF INCOME TO WHICH THIS RULING APPLIES:
Year ended 30 June 2003
Year ended 30 June 2004
Year ended 30 June 2005
Year ended 30 June 2006
TAX LAW:
Income Tax Assessment Act 1936 subsection 6(1).
Income Tax Assessment Act 1936 paragraph 23(jb).
Income Tax Assessment Act 1936 paragraph 128B(3)(a).
WHAT THIS RULING IS ABOUT:
Is the trustee of the fund exempt from income tax on its interest and/or dividend income derived from Australia under paragraph 23(jb) of the Income Tax Assessment Act 1936 (ITAA 1936)?
Is the trustee of the fund excluded from liability to withholding tax on its interest and/or dividend income derived from Australia under paragraph 128B(3)(a) of the ITAA 1936?
THE SUBJECT OF THE RULING:
The applicant has applied for a private ruling for an overseas superannuation fund. The application includes :
· Certificate from the foreign taxation authority certifying that the fund is resident in the foreign country and exempt from taxation on its investment income in that country.
· Two foreign taxation authority Determination letters for the fund, both under its former and current name.
· Trustee Statement for the fund under its former name.
· Pension Plan Summary for the fund under its former name.
· Text of the fund's Plan.
· Financial statements for the fund.
The fund provides for superannuation benefits as well as loans to members.
COMMENCEMENT OF ARRANGEMENT:
1 July 2001
RULING:
Is the trustee of the fund exempt from income tax on its interest and/or dividend income derived from Australia under paragraph 23(jb) of the ITAA 1936?
No
Is the trustee of the fund excluded from liability to withholding tax on its interest and/or dividend income derived from Australia under paragraph 128B(3)(a) of the ITAA 1936?
No
EXPLANATION: (This does not form part of the Notice of Private Ruling)
In order for the trustee of the Fund to be exempt from income tax under paragraph 23(jb) of the ITAA 1936 and withholding tax under paragraph 128B(3)(a) of the ITAA 1936, it must satisfy the definition of a 'foreign superannuation fund' under sub-section 6(1) of the ITAA 1936.
Subsection 6(1) of the ITAA 1936 states:
'Foreign superannuation fund' means, subject to subsection (7A), a provident, benefit, superannuation or retirement fund:
(a) that was established in a country outside Australia;
(b) that was established, and is maintained and applied, for the sole purpose
of providing superannuation benefits for persons other than persons who are, or would ordinarily be or become, residents of Australia or residents of a Territory; and
(c) the central management and control of which is carried on outside
Australia by persons none of whom is a resident of Australia or a resident of a Territory;
not being a fund for which an amount has been set aside, or to which an amount has been paid, by a taxpayer that is an amount that has been allowed or is allowable as a deduction, or in respect of which a rebate of tax has been allowed or is allowable, under any provision of this Act.
Thus, this definition states that the provident, benefit, or superannuation fund must have been established, maintained and applied, for the sole purpose of providing superannuation benefits. As the Fund provides benefits other than superannuation benefits (namely, loans), it is considered that the Fund does not satisfy the sole purpose test of providing superannuation benefits.
Paragraph 23(jb) of the ITAA 1936 includes a requirement that the fund '…at all times during the year of income, was a foreign superannuation fund…' As the Fund does not satisfy that requirement, it is not exempt from income tax under that provision.
Paragraph 128B(3)(a) of the ITAA 1936 includes a requirement that the fund is '…exempt from income tax because of paragraph 23(jb) of the Act…'.
As the Fund is not exempt from Australian income tax, it is also not excluded from Australian withholding tax.
Disclaimer
The Register of Private Binding Advice is published as a public record of the binding advice issued by the ATO. Each piece of advice is based on a specific set of circumstances advised to the ATO and the law in force at the time of the advice, and is considered binding only in respect of the person/s or entity/ies on whose behalf the advice was sought. The Register is a historical record of advice provided, and is not updated to reflect changes in the law, withdrawal of advice or any other change in circumstance. Each piece of advice has been edited to avoid disclosing the identity of the person or entity on whose behalf advice was sought and published advice may therefore not disclose all the relevant facts or circumstances on which the advice was based. For these reasons, advice published in this Register cannot be relied upon as precedent for any other person or entity.